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Tuesday, October 17, 2006

Likely Strong Run Up in Gold, Followed by Downward Test Before Take Off!

The US DOLLAR INDEX chart looks rotten today. It has bounced off the 87 - 87.30 ceiling thrice since mid-June. In fairness, 3 days ago it hit the 200 Day Moving Average, so it is to be expected it would ricochet. Still, it the buck can't climb above 87.30 soon, gravity will take over.

STOCK market bulls are all bloviating about a new bull market, but it's all bloviation. From whence will it launch, from P.E.s of 18 and yields of 1.6%? Not much foundation there, I trow. Flee stocks, yes, sell them as soon as possible and buy silver and gold. Y'all will look back on this as the opportunity of a couple of lifetimes.

Will the GOLD/SILVER RATIO rise again, or has it already seen its high for this move? If you still hold gold you want to swap for silver, do it whenever the ratio reaches 53:1, or miss it forever.

Here's the picture on the GOLD PRICE moving averages, all rising: 17 day at 584.32, 50 at 602.87, 200 at 599.51. What happened today? Gold simply bounced off its 200 and 50 DMAs, and, more importantly, its top channel line. Can it break through? I think so, for a test of 610, then 620. If it clears 625, it's running again. Beneath lies obvious support at 560. Most likely outcome seems to me a strong run up, followed by one more downward test before it takes off. There's time to do all that before end-November. Today, notice, that Gold fell back to 588-ish resistance, but not through. I read that as strong.

Today the SILVER PRICE offered no surprise. It reached its 50 DMA (1173.92) and you can expect sellers clustered around that number. Still, it stands above its other MA.s, which are all pointed up. Expect higher prices and an attack on 1200 soon.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $1,250.00; silver's primary is up targeting 16:1 gold/silver ratio or $78.13; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.